Oil extends rally as EU members weigh Russian ban
The sun sets past pumpjacks in the Belridge oilfield on November 03, 2021 near McKittrick, California.
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Oil prices extended their gains on Tuesday as some members of the European Union discussed a possible oil embargo on Russia and attacks on Saudi facilities sowed jitters in the market.
First-month West Texas Intermediate futures rose $2.20, or 1.96%, to $114.32 a barrel on NYMEX and Brent futures rose $3.18, or 2 .75%, at $118.80 a barrel on the Intercontinental Exchange at 0440 GMT.
Both contracts had sold over 7% on Monday, with the potential for further supply disruptions weighing on the market.
European Union foreign ministers are divided on whether to join the United States in sanctioning Russian oil, with some countries including Germany arguing that the bloc is too dependent on fossil fuels from the Russia.
“It appears that energy traders are increasingly convinced that supply shortages are imminent,” Edward Moya, an analyst at OANDA, said in a note.
Prices are rising in response to geopolitical concerns in Ukraine and attacks on Saudi Aramco sites, Moya added.
“Right now, it looks like the risks are increasing and that could push up crude prices.”
Saudi Arabia has warned that it will not be responsible for global supply disruptions following attacks on its oil facilities by the Iran-aligned Houthis.
The comments came after the group fired missiles and drones at Saudi state oil company facilities over the weekend, causing a temporary drop in refinery output.
Analysts said there are additional concerns about OPEC+ production that could exacerbate supply issues.
“We estimate the difference between OPEC+ production targets and actual production was just over 800,000 barrels per day (bpd) last month and will reach 1.15 million bpd in March,” the firm said. JBC Energy consultancy in a note.
Meanwhile, crude oil inventories in the United States likely remained unchanged last week, a preliminary Reuters survey showed on Monday.
Analysts estimated that gasoline inventories fell by about 2.1 million barrels last week, while distillate inventories, which include diesel and fuel oil, are expected to have fallen by 1.6 million barrels. .
The poll was taken ahead of reports from the American Petroleum Institute, an industry group, at 4:30 p.m. EST (2130 GMT) on Tuesday.